Does US Want to Isolate China Via an APEC FTA?

Oops, I may have spoken too soon when I mentioned that the US would not seek to antagonize China by excluding it from an Asia-Pacific FTA. This is just a brief follow-up to a recent post I made pooh-poohing prospects for an expanded Trans-Pacific Partnership composed of APEC member countries.

First, after dilly-dallying a bit, PM Yoshihiko Noda now says Japan will join the negotiations:

Japan's decision to join talks on a trade deal spanning the Pacific marks a major boost for the US bid to shape the new order in Asia, but it will likely mean longer, rockier negotiations...The move by Japan, announced by Prime Minister Yoshihiko Noda just before heading to Honolulu, leaves China as the conspicuous outlier in the emerging trade deal which will now encompass more than one-third of the global economy.

Second, it may be or likely is the case that Japan--a heavyweight with a complex domestic political economy similar to the US--will further complicate negotiations. Think of the WTO Doha Development Agenda and its non-completion due to the ever-expanding number of members and their different agendas. We even have the Stone Age fear of US automakers and Japan Inc [?!]:

But Japan's political leaders decided that "it is a strategic agreement to ensure that Japan is part of the rule-making process," said Michael Green, a Japan expert who was a top aide to former president George W. Bush. Green, now a scholar at the Center for Strategic and International Studies and Georgetown University, said US trade negotiators are likely nervous as they must now contend with a "large and sophisticated and complicated counterpart.""It may complicate the negotiations in the short-run by having the third largest economy entering, but it also makes the TPP a much more credible pillar for an Asia-Pacific-wide free trade agreement," he said.

The United States has said it wants to move quickly to wrap up the Trans-Pacific Partnership, but many observers believe that the deal will take years -- especially now that Japan is involved.

While the United States has saluted Japan's decision to join the talks, a number of US lawmakers and industries are haunted by bruising trade negotiations with the Asian ally in the 1980s. The American Automotive Policy Council, which represents General Motors, Ford and Chrysler, said that a free trade agreement with the land of auto giants such as Toyota would devastate a recovering Detroit. "Providing preferential trade benefits to Japan, while they continue to embrace closed-market policies, would only serve to undermine the competitive gains made by American automakers," said Matt Blunt, the council's president. US automakers had initially fought against a US free trade agreement with South Korea, which was approved last month by Congress after marathon talks and concessions to Detroit.

American automakers have kept trying to sell their crapmobiles--often oversized left hand-drive vehicles in an RHD country--but haven't learned their lesson is all I have to say about the latter.

Third, China is indeed coming around to being excluded from the process despite after all being an APEC member country:

But the trade pact also has a political dimension. Chinese media have characterized it as a way to isolate the growing power, although a senior official, Yu Jianhua, said in Hawaii that China would consider the pact if invited.

Fourth, here's the most galling part. In a recent speech at the East-West Center in Honolulu, Hillary "Internet Freedom" Clinton recycles her freedom 'n' growth schtick in describing the rationale for expanding TPP. Not exactly China-friendly talk, eh?

There is new momentum in our trade agenda with the recent passage of the U.S.-Korea Free Trade Agreement and our ongoing work on a binding, high-quality Trans-Pacific Partnership, the so-called TPP. The TPP will bring together economies from across the Pacific, developed and developing alike, into a single 21st century trading community. A rules-based order will also be critical to meeting APEC’s goal of eventually creating a free trade area of the Asia Pacific.

The United States will continue to make the case that, as a region, we must pursue not just more growth but better growth. This is not merely a matter of economics. It goes to the central question of which values we will embrace and defend. Openness, freedom, transparency, and fairness have meaning far beyond the business realm. Just as the United States advocates for them in an economic context, we also advocate for them in political and social contexts.

While I appreciate the mom, apple pie & Guantanamo Ghraib sentiment, there are two big troubles with this shtick. Let's start with founding TPP member Brunei. It is an absolute monarchy with next to no press freedom. Do you think it's appropriate for Johnny-come-lately USA to dictate to Brunei what standards TPP member countries should be held to, or the other way around? Next let's move on to Vietnam. Returning to the AFP article...

Critics say that communist Vietnam's membership weakens the US message that the deal is about fundamental freedoms.

Message to Hillary Clinton: Save it for the next Sarah Palin rally, girlfriend (even if you should not personally deliver the message if you knew any better). Nevertheless, why do certain folks keep thinking that this schmaltz pass without notice?

UPDATE: Reuters has more on China and the TPP. As an important aside, shouldn't news agencies point out that the TPP is a preexisting FTA instead of one that is just coming into fruition due to US-led efforts fer crying out loud?

China is not part of these trade talks, and views them warily. The differing views were captured on Friday in a politely pointed public exchange between top American and Chinese trade officials.

Asked whether China would join the TPP, as the talks are known, a Chinese official, Assistant Commerce Minister Yu Jianhua, noted that no invitation had been sent to Beijing. "If one day we receive such an invitation, we will seriously study" it, Yu said.

U.S. Trade Representative Ron Kirk responded that the trade deal "is not designed to be a closed clubhouse. All are welcome. But it is also not one where you should wait for an invitation."

Also:

A commentary in China's state-owned news agency Xinhua said Washington was using the trade deal as a way to enhance its influence in Asia on its own terms. "The United States' primary reason for actively promoting the development and expansion of the TPP is to raise its leadership in the Asia-Pacific region," Xinhua wrote.

"The United States does not want to miss a golden opportunity with the economic development in the Asia-Pacific, and at the same time it hopes to install a fixed set of rules to guide changes in the region's future political and economic structure."